Dan Martell - How Uber Raised Their Capital

00:00:00.160 Here's what the founder of Uber

00:00:02.840 taught me about raising capital.

00:00:05.560 The guy who's raised billions of dollars in funding

00:00:08.400 personally mentored me in my companies

00:00:11.200 that let me raise millions of dollars,

00:00:13.080 not only for my own companies,

00:00:14.200 but close to $600 million for companies

00:00:17.060 I advise and invest in.

00:00:18.640 I wanna take all of that,

00:00:19.940 even if you feel like I don't have a network,

00:00:22.120 how am I supposed to find these people?

00:00:23.600 How do I get introduced to investors?

00:00:25.600 What is the process?

00:00:26.760 I mean, are they really gonna give me this money

00:00:28.920 and is gonna go into my bank account all of a sudden,

00:00:30.800 now I have millions of dollars to invest in my company?

00:00:33.540 Yes, that is how it works, if you understand this.

00:00:37.820 I'm gonna break it down, make it simple,

00:00:39.920 and teach you the tactics

00:00:41.000 that nobody's ever shared with you before

00:00:43.180 about raising capital for your startup.

00:00:49.580 Number one, here's how to get investors

00:00:52.020 even if you have no network whatsoever.

00:00:54.180 When I moved to San Francisco, I was 28.

00:00:56.420 I didn't know a soul, not a friend, not a colleague.

00:01:00.240 I just moved there because I wanted to learn everything

00:01:02.720 there was about building software.

00:01:04.660 That was my passion.

00:01:05.720 I wanted to see if any of my crazy ideas would hold water

00:01:09.620 with some of the smartest entrepreneurs in the world.

00:01:12.580 And here's what I learned.

00:01:14.200 Literally the best of the best move there.

00:01:17.260 They execute, they network, they collaborate.

00:01:21.220 And one of the things that was fascinating

00:01:23.100 is watching these 20 year olds raise millions of dollars

00:01:26.160 for their ideas.

00:01:27.340 Sometimes it was a napkin sketch, right?

00:01:29.840 And I'd go to these coffee shops and meet these people

00:01:31.880 and they're like, yeah, we just raised $15 million.

00:01:33.720 I'm like, how?

00:01:35.220 And they would tell me and I'm like, that's crazy.

00:01:37.380 Or another entrepreneur would be like, yeah

00:01:38.480 we just raised a maze, $7 million.

00:01:40.520 I'm like, I don't get how you've done this.

00:01:43.280 And then eventually I started my own company Flowtown

00:01:45.840 and my co-founder and I Ethan said, you know what?

00:01:48.460 Maybe we should raise some money.

00:01:50.020 So we decided to put a pitch deck together

00:01:52.420 and start talking to people in the ecosystem.

00:01:56.160 We reached out to my buddy, Nivy.

00:01:58.040 We reached out to my other friend, Mark.

00:01:59.660 And we just kept asking people,

00:02:00.860 do you know any investors?

00:02:01.840 Can you make the introductions?

00:02:03.120 And we started having conversations.

00:02:05.300 And quickly I realized that investors

00:02:08.040 don't want to hear from you.

00:02:09.800 They don't wanna be pitched.

00:02:10.980 They wanna be introduced to you.

00:02:12.720 And it's a big idea.

00:02:14.180 Here's how it works.

00:02:15.600 So when you're out there and you're trying to raise money,

00:02:17.720 instead of cold emailing all these investors with like,

00:02:20.740 this is the best startup and here's my pitch.

00:02:22.720 Here's how we're gonna make a bazillion dollars.

00:02:24.740 What you wanna do instead is get introduced

00:02:26.940 to these investors through their trusted networks.

00:02:29.260 My favorite way to do this,

00:02:30.960 and I learned this from my buddy, Tim,

00:02:32.620 is you want to ask for advice and get an introduction.

00:02:37.060 So if you know there's people

00:02:38.500 that have recently raised money

00:02:39.900 from investors that you admire,

00:02:41.160 if you make your list of investors,

00:02:42.920 then you want to reach out to those entrepreneurs

00:02:45.340 that recently took money from them,

00:02:47.400 ask them if they've got seven minutes

00:02:49.120 to get on a phone call to talk about their experience,

00:02:51.860 to give you advice, and they're gonna do it

00:02:53.720 because they remember what it was like

00:02:55.120 when they first started.

00:02:56.660 And through that process,

00:02:58.080 if you do all the right steps

00:02:59.540 in the conversations I'm gonna teach you today,

00:03:01.660 then they're eventually gonna say,

00:03:03.500 hey man, this sounds really cool.

00:03:04.960 How can I help you?

00:03:06.060 And in that moment, you can say,

00:03:08.300 well, I noticed that this investor

00:03:10.380 invested in your company.

00:03:11.560 I'm wondering if you'd be open to make an introduction.

00:03:14.220 And in that moment, that is your in.

00:03:17.480 And the key is, and this is the ninja move

00:03:19.320 I wanna share with everybody,

00:03:20.660 is you want to write the intro email for them.

00:03:23.740 Do not allow a busy entrepreneur

00:03:26.440 who's too busy to even respond to their own inbox,

00:03:28.980 write an email introducing you to their investor.

00:03:31.960 What I do instead is I'll craft it myself

00:03:34.360 and I'll write it in a way that's very simple.

00:03:36.640 I'll send it to the entrepreneur and I'll say,

00:03:38.920 hey, here's an email that we've used with other investors.

00:03:41.900 Feel free to edit and send it along the way.

00:03:44.660 This way, even if you have no network,

00:03:46.780 you can find people that have recently raised

00:03:48.860 from investors that you wanna talk to,

00:03:50.600 ask for advice, make the spreadsheet,

00:03:52.820 get that conversation going.

00:03:54.440 And when they open the door,

00:03:55.620 you can ask for an introduction using the language

00:03:58.140 and the copy and the bullets that you wanna share

00:04:01.080 with that investors to really amplify the opportunity.

00:04:04.320 90% of the time, they'll take the meeting.

00:04:06.840 Number two, you have to have a product demo

00:04:09.880 that stops investors in their track.

00:04:12.020 Here's how to do it.

00:04:13.260 When I was starting my company Clarity,

00:04:15.300 I had this product that allowed entrepreneurs

00:04:17.220 to get advice over the phone from other entrepreneurs.

00:04:19.720 And it was really cool because essentially

00:04:21.460 there was a marketplace and people would find experts.

00:04:24.000 They would decide to request the call.

00:04:25.800 The other person would accept it.

00:04:27.060 They get on the call, that expert would get paid.

00:04:29.500 And the person would get the information, the knowledge,

00:04:31.400 the wisdom that they needed to move their business forward.

00:04:34.520 So I was like doing a lot of these calls

00:04:36.860 with different entrepreneurs and doing the demos.

00:04:38.620 And eventually I realized that I had a process

00:04:42.140 for demoing my product that just dropped the mic.

00:04:45.020 And this is what I did.

00:04:45.860 I Ubered my way to Sand Hill Road.

00:04:48.060 This is the street where literally there's hundreds

00:04:50.440 of VCs that have their head offices in Silicon Valley.

00:04:54.340 And I went to each VC that I had known

00:04:56.520 in my previous fundraising process.

00:04:58.380 And I just asked them, hey,

00:04:59.460 do you wanna see my new product?

00:05:00.620 And of course they're like, yeah,

00:05:01.700 you just sold your company.

00:05:02.640 I'd love to see what you're working on now.

00:05:04.300 And I would go into their office

00:05:05.640 and I had the app ready to go on my phone.

00:05:08.140 I would say, go to clarity.fm and they would go there.

00:05:10.560 It would prompt them to connect to Facebook.

00:05:13.160 They would connect to Facebook Connect.

00:05:14.740 It then created a profile on the backend of my phone.

00:05:17.580 I would click the phone.

00:05:18.940 It would call their number because it got it from Facebook.

00:05:21.840 And then they would answer and they would hear

00:05:24.160 Clarity calling you a request from Dan Martell.

00:05:26.080 Click one to accept or two to deny, one to accept.

00:05:28.980 And as soon as they did that, I would leave the room.

00:05:31.720 I would go into the conference room

00:05:33.020 and I'm talking to them on Clarity through their phone.

00:05:36.540 And I would pitch them what my vision was.

00:05:39.300 I would tell them about how I think it could allow

00:05:41.620 all these social media influencers

00:05:43.360 to monetize their audience, their attention,

00:05:46.120 to create a new economy, a wisdom economy,

00:05:49.400 to really unlock all this potential,

00:05:51.600 these people that have experience and knowledge

00:05:53.400 on how to do stuff with those that don't.

00:05:55.240 I'd do this call, I'd talk about the market size

00:05:57.520 and the product and the team and everything

00:05:59.200 and all the traction, and then I would hang up

00:06:01.660 and I would go back into their office

00:06:03.780 and I would say, check your email.

00:06:05.820 And they'd be like, why?

00:06:06.660 And when they opened up, they would say,

00:06:08.440 you got a clarity payment,

00:06:09.820 and it would show the amount of time we'd talk

00:06:11.540 in the amount of money, I'd just pay them a dollar a minute.

00:06:13.580 And it would say, this is available

00:06:15.200 for you to download on PayPal.

00:06:16.920 And in that moment, I'd go pretty cool, right?

00:06:19.540 And they'd be like, holy moly.

00:06:21.680 And I was like, okay, now I got to go,

00:06:23.480 I got another meeting, but yeah,

00:06:24.920 I just wanted to show you the prototype, the demo,

00:06:27.960 follow up, let's talk on email, what you think.

00:06:30.240 And then I would leave.

00:06:31.540 And that's what I think every entrepreneur needs

00:06:34.560 to understand is when I'm going to meet with an investor

00:06:37.760 and they go, all right, tell me what you're working on.

00:06:40.440 Show the demo, okay?

00:06:41.800 It's a show, don't tell.

00:06:43.180 You don't wanna tell them about how great your product is.

00:06:45.680 Show them how great your product is

00:06:47.520 by having a demo that is orchestrated,

00:06:50.600 that is designed to get them to go,

00:06:52.600 holy crap, that's the coolest thing I've ever seen. 0.88

00:06:54.980 We did this with Flowtown. 0.97

00:06:56.240 I've done this and coached so many entrepreneurs

00:06:58.180 to make sure that in the right moment,

00:06:59.980 you drop the mic and the demo

00:07:01.940 just sells the investor themselves.

00:07:04.400 The rest of the questions are gonna come up,

00:07:06.420 but the product demo is the most important to get right.

00:07:09.360 Now, if you want a tip,

00:07:10.540 go watch how the best in the world have done this.

00:07:14.040 You know, Dropbox and Airbnb and so many

00:07:17.420 have their pitch videos available online on YouTube

00:07:21.200 from the YC Demo Days to TechCrunch 50 events.

00:07:25.080 All the best startups have a pitch deck.

00:07:27.880 You can go watch all of Steve Jobs' videos,

00:07:30.120 but I want you to go watch the best of the best.

00:07:32.920 Drop the mic on the product demo

00:07:35.200 to inspire you to think through

00:07:36.600 how you tell your product story.

00:07:38.960 Number three, getting oversubscribed

00:07:41.460 in your fundraising process

00:07:42.980 so you can overcome investors' biggest objections.

00:07:45.920 Here's what it is.

00:07:47.020 When you're meeting with an investor,

00:07:48.680 their biggest fear is for them to give you money

00:07:52.320 and you not be able to raise the rest of the round

00:07:55.000 that you're gonna need to grow the business.

00:07:56.600 They don't wanna be the person holding the bag

00:07:59.260 when you run out of money and they come back to you

00:08:01.520 and they go, hey, I know we were supposed to get

00:08:03.220 to this level of success or this amount of traction

00:08:05.840 and we haven't gotten there.

00:08:07.160 Could you write me another check?

00:08:08.600 Like no investor wants to be there.

00:08:10.400 They wanna know that you've gotten other people

00:08:12.880 excited about the idea and they're supporting your fundraise.

00:08:17.000 So the way you do this is you have the conversations,

00:08:20.460 you get the introductions, you meet with the investors,

00:08:23.040 you do the demo that blows their minds,

00:08:25.560 gets them excited and want them to participate.

00:08:28.360 But the language you use is critical.

00:08:31.080 So what you wanna do is when you're communicating

00:08:34.400 is come off with a sense of confidence,

00:08:36.480 a sense of urgency, a sense of like,

00:08:38.760 this is 100% gonna happen.

00:08:40.780 And what you do is you ask this question,

00:08:42.800 this will change the game on how the investor sees you,

00:08:46.000 is you wanna communicate to them and say,

00:08:48.060 hey, it's very likely that we're gonna get oversubscribed.

00:08:51.000 And I'm just curious, when you invest,

00:08:53.240 what level of commitment do you typically make?

00:08:55.820 Because that'll allow us to understand

00:08:57.660 how we design the composition of our round.

00:09:01.060 Write that down, okay?

00:09:02.620 You want the investor to think

00:09:03.900 we are gonna be oversubscribed

00:09:05.540 And we need to understand your level of commitment

00:09:07.820 you usually make when you invest.

00:09:09.240 Is it 50K, is it 100K, is it 500K?

00:09:12.040 Because when we're deciding the composition of the round,

00:09:15.100 you may or may not have an allocation.

00:09:17.480 And if you use that language, it really sets the frame.

00:09:20.280 Like I'm gonna get this round done.

00:09:22.100 I'm going to raise this money.

00:09:23.800 And I'd like for you to be involved,

00:09:25.420 but if you don't tell me at what level

00:09:27.000 you wanna be involved in,

00:09:28.380 you may get kicked out of the round,

00:09:29.780 which happens to investors all the time.

00:09:32.680 So here's my tip.

00:09:33.800 Ask yourself, have I practiced this?

00:09:36.280 Have I sat down and role play with my co-founder?

00:09:39.120 Do I know when to ask that question?

00:09:41.680 What will I see from the investor

00:09:43.400 in regards to their excitement or their interest?

00:09:45.280 To make that a very logical question

00:09:47.360 and to write it down and almost come across

00:09:49.740 with the level of confidence and certainty

00:09:51.640 that this round is gonna get done.

00:09:53.920 Those are the three strategies

00:09:55.400 that the founder of Uber taught me

00:09:57.400 on raising rounds in record time.

00:09:59.780 You wanna make sure that you're getting introductions

00:10:02.120 to investors from entrepreneurs

00:10:03.880 that they've recently given money to.

00:10:06.400 Two, you wanna make sure that you have a product hook

00:10:09.380 in your demo that stops them in their tracks.

00:10:12.420 And three, you wanna make sure that you oversubscribe

00:10:15.440 or communicate that so that investors

00:10:17.960 get their biggest objection handled.

00:10:20.480 If you like this video, be sure to subscribe to my channel

00:10:23.080 or click the link below to get some free training.

00:10:25.200 It's called Fundraising Like a Pro

00:10:26.700 where I unpack the three phases of fundraising.

00:10:30.300 It's absolutely free.

00:10:31.340 It's my gift to you and it's gonna help you to understand

00:10:33.700 how to build that CRM, that spreadsheet

00:10:36.740 to track all the investors and the introductions

00:10:38.660 and the composition of the round

00:10:39.820 and to make sure that you go into fundraising mode

00:10:42.300 with momentum and most importantly,

00:10:44.380 that you close with persistence to get everything done.

00:10:48.940 Be sure to check out that training.

00:10:50.220 It's my gift to you and as per usual,

00:10:52.200 I wanna challenge you to live a bigger life

00:10:54.060 and a bigger business.

00:10:55.280 I'll see you next Monday.

00:11:01.340 Thank you.

Dan Martell - May 08, 2023

How Uber Raised Their Capital

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